Good News! U.S. Citizens in Japan can NOW use NISA account.
A Practical Guide Using Interactive Brokers Japan
For U.S. citizens living in Japan, investing often comes with an extra layer of complexity.
Japanese tax rules, U.S. tax obligations, and product restrictions do not always align—and misunderstandings around Japan’s NISA (Nippon Individual Savings Account) are especially common.
In this article, we explain how NISA works for U.S. citizens, what is possible through Interactive Brokers Japan (IBSJ), and when NISA may—or may not—make sense as part of a long-term investment strategy.
What Is NISA?
NISA is Japan’s government-sponsored, tax-advantaged investment account designed to encourage long-term investing by individual residents.
Under Japan’s tax system, investments held inside a NISA account benefit from:
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Tax-free capital gains
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Tax-free dividends
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No Japanese withholding tax
For many Japanese investors, NISA functions similarly to a tax-free brokerage account.
Can U.S. Citizens Use NISA in Japan?
Yes—U.S. citizens who are Japanese tax residents can legally use NISA.
Interactive Brokers Securities Japan (IBSJ) offers both the NISA Growth Investment Account and the Tsumitate (accumulation) account.
However, NISA is available only through IB’s Japanese entity, not through overseas Interactive Brokers accounts.
From a Japanese legal perspective, U.S. citizenship does not prevent participation in NISA.
What Can You Invest in Through IBSJ’s NISA?
This is where expectations and reality often diverge.
Under the NISA Growth Investment Quota, IBSJ allows investment in:
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Japanese-listed stocks
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Foreign individual stocks (including U.S. stocks)
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A limited selection of ETFs
While Interactive Brokers offers access to hundreds of U.S.-listed ETFs in taxable accounts, only a very small subset is eligible for NISA due to Japanese regulatory approval requirements.
In practice, many investors find that fewer than ten U.S.-domiciled ETFs are consistently usable within IBSJ’s NISA account.
Commonly confirmed examples include broad, plain-vanilla ETFs such as:
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VTI, VT, VOO, SPY
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QQQ
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GLD
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SPYD
Bond ETFs, thematic ETFs, leveraged products, and complex strategies are typically excluded.
If an ETF is not eligible, IBSJ’s trading system will usually display an error at order entry.
NISA vs. Taxable Accounts: A Key Difference
Compared to a standard taxable brokerage account, NISA is far more restrictive.
Taxable accounts at IBSJ allow:
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Most U.S.-listed ETFs
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Bond ETFs
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Individual bonds
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Options, futures, CFDs
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Leveraged and inverse ETFs
NISA, by contrast, is limited to government-approved, long-term-oriented products.
Japanese Tax Treatment: Clear and Simple
From Japan’s perspective, NISA works exactly as intended.
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Capital gains: tax-free
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Dividends: tax-free
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No Japanese reporting for investment income inside NISA
This simplicity is one of NISA’s main attractions.
U.S. Tax Treatment: The Critical Caveat
For U.S. citizens and other U.S. persons, there is an important limitation:
🚨 The United States does not recognize NISA as a tax-advantaged account.
This means:
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Dividends are taxable in the U.S.
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Capital gains are taxable in the U.S.
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Normal IRS reporting requirements apply
In short, NISA is tax-free in Japan, but fully taxable in the United States.
Is NISA Still Useful for U.S. Citizens?
Despite this limitation, NISA is not necessarily pointless for U.S. investors.
Potential advantages include:
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Access to U.S.-domiciled ETFs while living in Japan
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Avoidance of PFIC-related complications
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No Japanese withholding tax
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Clean and simple Japanese compliance
At the same time, NISA should not be misunderstood as a U.S. tax shelter.
Cost basis tracking, dividend reporting, and currency considerations still matter.
For many U.S. citizens, NISA works best as a structural tool, not a tax strategy.
Common Misunderstandings
Several myths continue to circulate:
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“NISA is useless for U.S. citizens”
→ Not true. It can still be operationally useful. -
“NISA income is tax-free everywhere”
→ Incorrect. Only Japan grants tax exemption. -
“Interactive Brokers doesn’t support NISA”
→ IBSJ does support NISA.
Understanding these distinctions helps set realistic expectations.
A Recent Change That Matters for U.S. Citizens
Until relatively recently, NISA was effectively inaccessible for many U.S. citizens living in Japan.
While NISA itself has always been part of Japan’s tax system, most platforms offering NISA accounts were available only in Japanese and were not designed for internationally mobile investors. As a result, many U.S. citizens either avoided NISA altogether or found it impractical to use.
This situation changed when Interactive Brokers Securities Japan (IBSJ) began offering NISA accounts through an English-language trading platform.
As a result, U.S. citizens who are Japanese tax residents can now open NISA accounts at IBSJ and actively invest, using an interface and account structure that is consistent with Interactive Brokers’ global systems.
Although the underlying tax rules and product restrictions of NISA remain the same, accessibility has improved significantly, making NISA a more realistic option for U.S. investors living in Japan.
Final Thoughts
For U.S. citizens living in Japan, investing is rarely simple—but it can be manageable with the right structure.
Interactive Brokers Japan’s NISA, when combined with carefully selected U.S.-domiciled ETFs, can serve as a practical investment wrapper that avoids PFIC issues and Japanese taxes, while remaining fully compliant with U.S. tax obligations.
As always, individual circumstances matter, and professional advice is recommended before implementing any cross-border investment strategy.
